MONTPELIER – Even before residents vote on the Montpelier school district budget this March, the School Board is beginning talks for next year’s vote.

School Board member Charlie Phillips says that’s about six or seven months earlier than usual. The discussion comes as the district will face increases of about $500,000 each fiscal year for three years due to negotiated contracts and health benefits that call for 3 percent increases on average, Superintendent Brian Ricca told the City Council Jan. 24.

Due to the agreements, the budget rise from $16,986,916 for the upcoming school year, which is fiscal year 2014, then to nearly $17.5 million and then $18 million the following year, Ricca said during the meeting.

“Sitting here, I’m looking at a $2 million increase over two years, and it’s just sort of mind-boggling,” Mayor John Hollar said at the meeting. “It’s clearly not sustainable.”

School Board members say the increases are needed for the district to prevent teachers from switching to neighboring jobs and that Montpelier teachers are in the middle of the pack compared to other districts in central Vermont. School Board member Ken Jones said Thursday given declining enrollment, the response of decreasing the level of staffing can take time.

“It’s just hard to fathom in an area where median income in Vermont is about where it was in 2007,” Hollar said. “We’re lower actually than we were six years ago in household income, and yet we’re proposing an increase in teacher salaries of 10 percent over the next three years.”

“That follows increases (for) every one of those last six years,” said Hollar, who recently chaired the city’s Board of School Commissioners. “We haven’t had any years in which they’ve been held steady. It’s just hard to reconcile.”

The “teachers” union contract, approved in October, has a 4 percent overall increase that went into effect for the beginning of this school year and will have increases of 3 percent for the upcoming two school years. A second bargaining unit, the Montpelier Educational Support Staff Association, negotiated a similar agreement for the same three years.

The “teachers” bargaining unit, dubbed the Montpelier Education Association, covers about 120 staff, which includes nurses and coaches. Fiscal years, which begin and end in the summer, for 2011 and 2012 for the group covered two one-year contracts, each with 1.5 percent increases.

A third bargaining unit covering 13 staffers for facilities, administrative support staff and technology support specialists is still negotiating a three-year contract that would begin next year.

Phillips, who was also an English teacher and a high school principal at the district, suggested at Wednesday night’s board meeting for the district to highlight its strengths. He proposed the district re-explore moving fifth graders to the Main Street Middle School from Union Elementary School, where a growing student population currently makes space limited.

As part of the one-year budget look ahead, school officials also suggested several ideas, such as providing opportunities for high school students beyond interactions with teachers and using creative problem-solving like the district did with boys and girls ice hockey teams in the past, where the district merged those teams with other school districts.

Phillips also said afterward the district could also pursue a new negotiating process in the future that would rely more on identifying mutual goals rather than a give-and-take approach, where sides can tend to make extreme offers.